Iris Energy, an Australian-based cryptocurrency firm publicly listed on Wall Street (NASDAQ:IREN), has switched off a part of its mining hardware used as collateral in a $107.8 million loan. According to the newest regulatory filing at the US Securities and Exchange Commission (SEC ) from 21 November 2022, the company's electricity costs increased by 312% over one year.
The secured miners owned by Non-Recourse SPV 2 and Non-Recourse SPV 3 produced insufficient cash flow. Their operations generated around $2 million in crypto profit monthly, which is significantly below the debt obligation of $7 million.
Iris Energy was forced to reduce its hash power to 3.6 exahashes per second (EH/s). However, the company intends to increase its mining potential. It wants to benefit from $75 million in prepayments made to Bitmain, a mining rigs manufacturer, as part of its contracted 7.5 EH/s machines for independent mining.
Moreover, the company announced some preliminary financial results for the third quarter of 2022. Operating revenues reached $16.2 million, which is a significant increase from $10.4 million reported in the previous quarter. However, as mentioned at the beginning, the company had to cover a substantial increase in electricity costs to $6.6 million from $.16 million reported in the same period last year.
A Growing List of Miners' Problems
The Aussie cryptocurrency mining company is not the only firm whose operations have recently been hovering on a thin profitability line. The prolonged 'cryptocurrency winter', a situation where major assets move in a sideways trend at multi-month lows for an extended period, visibly cut potential profit.
Bitcoin has now lost 80% since its historic highs in 2021 when it cost nearly $70,000. Revenues and valuations of publicly traded mining companies on Wall Street are falling accordingly.
Iris Energy's shares have slipped 90% this year alone, and its rival Canaan has lost 50%. The company reported its third-quarter figures in the first half of November, showing a 90% drop in net income.
On top of that, HIVE Blockchain Technologies Ltd. and Hut 8 Mining Corp. felt the 'Bitcoin blues' and reported a sharp decline in revenues despite increasing hash power and a total number of mined cryptos.
The daily profit of BTC miners is now $13 million, which is the lowest in more than two years. Bitcoin currently costs less than $17,000, and until it moves back higher, the condition of the mining industry will certainly not improve.
Iris Energy, an Australian-based cryptocurrency firm publicly listed on Wall Street (NASDAQ:IREN), has switched off a part of its mining hardware used as collateral in a $107.8 million loan. According to the newest regulatory filing at the US Securities and Exchange Commission (SEC ) from 21 November 2022, the company's electricity costs increased by 312% over one year.
The secured miners owned by Non-Recourse SPV 2 and Non-Recourse SPV 3 produced insufficient cash flow. Their operations generated around $2 million in crypto profit monthly, which is significantly below the debt obligation of $7 million.
Iris Energy was forced to reduce its hash power to 3.6 exahashes per second (EH/s). However, the company intends to increase its mining potential. It wants to benefit from $75 million in prepayments made to Bitmain, a mining rigs manufacturer, as part of its contracted 7.5 EH/s machines for independent mining.
Moreover, the company announced some preliminary financial results for the third quarter of 2022. Operating revenues reached $16.2 million, which is a significant increase from $10.4 million reported in the previous quarter. However, as mentioned at the beginning, the company had to cover a substantial increase in electricity costs to $6.6 million from $.16 million reported in the same period last year.
A Growing List of Miners' Problems
The Aussie cryptocurrency mining company is not the only firm whose operations have recently been hovering on a thin profitability line. The prolonged 'cryptocurrency winter', a situation where major assets move in a sideways trend at multi-month lows for an extended period, visibly cut potential profit.
Bitcoin has now lost 80% since its historic highs in 2021 when it cost nearly $70,000. Revenues and valuations of publicly traded mining companies on Wall Street are falling accordingly.
Iris Energy's shares have slipped 90% this year alone, and its rival Canaan has lost 50%. The company reported its third-quarter figures in the first half of November, showing a 90% drop in net income.
On top of that, HIVE Blockchain Technologies Ltd. and Hut 8 Mining Corp. felt the 'Bitcoin blues' and reported a sharp decline in revenues despite increasing hash power and a total number of mined cryptos.
The daily profit of BTC miners is now $13 million, which is the lowest in more than two years. Bitcoin currently costs less than $17,000, and until it moves back higher, the condition of the mining industry will certainly not improve.
FAQs
The Biden administration recently announced that it would be requiring large cryptocurrency mining operations to report electricity usage, via a press release from The Energy Information Administration.
Does mining crypto use a lot of electricity? ›
Our preliminary estimates suggest that annual electricity use from cryptocurrency mining probably represents from 0.6% to 2.3% of U.S. electricity consumption. This additional electricity use has drawn the attention of policymakers and grid planners concerned about its effects on cost, reliability, and emissions.
How much energy does it take to mine 1 Bitcoin? ›
The fact is that even the most efficient Bitcoin mining operation takes roughly 155,000 kWh to mine one Bitcoin. By way of comparison, the average US household consumes about 900 kWh per month.
Is Bitcoin worth mining? ›
If a miner is able to successfully add a block to the blockchain, they will receive 6.25 bitcoins as a reward. The reward amount is cut in half roughly every four years, or every 210,000 blocks. As of November 2023, Bitcoin traded at around $36,400, making 6.25 bitcoins worth $227,500.
Can the IRS track crypto mining? ›
With a transaction ID, one can use a blockchain explorer to identify wallet addresses and their transaction histories. Government agencies, including the IRS and FBI, can trace these transactions back to individuals.
Do I have to report crypto mining on taxes? ›
Crypto mining is taxed in the US, meaning that you have to report all the income you had from mining each tax year by using the correct tax forms as an investor. If you're an incorporated business, your mining income will be taxed at the corporate level, with different filing requirements.
Is digital energy mining real or fake? ›
Digital energy mining is a real concept, but it is commonly referred to as cryptocurrency mining or Bitcoin mining. Cryptocurrency mining involves using specialized computer hardware to solve complex mathematical problems that validate and secure transactions on a blockchain network, such as Bitcoin.
Does crypto mining damage power supply? ›
Crypto mining can strain your PC's resources, primarily through heat generation and increased wear and tear on hardware like the CPU and GPU. Proper cooling, a reliable power supply, and moderate usage are crucial to minimize risks and extend your PC's lifespan while mining.
How much energy does crypto mining use in the US? ›
How much energy does cryptocurrency mining consume in the U.S.? A recent analysis by the Energy Information Agency (EIA) estimates that large-scale cryptocurrency operations consume more than 2% of the country's electricity.
Which country is currently the biggest Bitcoin miner in the world? ›
The biggest bitcoin mining countries are: 1) The United States (40%) 2) China (15%) 3) Russia (12%) This map will look very different in 1-2 years as miners in Africa and Latin America expand operations. A massive trend in the industry will be miners migrating toward these regions.
Cloud mining platforms such as ECOS or Bitcoin Minetrix can offer a low-cost alternative route. The mining industry is highly competitive. You will be up against professional and well-funded Bitcoin mining companies. Other factors like hash rate and mining difficulty will also come into play.
How much can you make a month mining bitcoin? ›
Crypto Mining Salary
| Annual Salary | Monthly Pay |
|---|
| Top Earners | $68,500 | $5,708 |
| 75th Percentile | $62,000 | $5,166 |
| Average | $55,819 | $4,651 |
| 25th Percentile | $48,500 | $4,041 |
The Bitmain Antminer S21 Hyd 335T is the most profitable Bitcoin mining machine currently, followed by the Canaan Avalon Made A1266, and MicroBit Whatsminer M50S. If you want to mine other cryptocurrencies, the Bitmain Antminer KS3, Bitmain Antminer D9, and Bitmain Antminer K7 are all solid choices.
What is the best coin to mine? ›
Bitcoin (BTC)
Bitcoin is the largest crypto by market capitalization and the most popular cryptocurrency to mine, with a reward of 6.25 BTC per block - although this halved in April 2024. Due to competition, you'll need a top-of-the-line mining rig to mine Bitcoin successfully, as well as to join a mining pool.
Can you lose on Bitcoin mining? ›
However, that doesn't mean mining is always a losing proposition. These calculations can change if the price of electricity goes down, or the value of Bitcoin goes up. If you believe Bitcoin's value will rise over time, you may think of your month-to-month losses as a long-term investment.
Does the US government control cryptocurrency? ›
The Securities and Exchange Commission regulates assets it determines to be securities. It doesn't yet regulate Bitcoin, but it is regulating investments or derivatives related to Bitcoin.
What is the miners tax on crypto? ›
If you earn income through crypto mining, the earnings are taxed as ordinary income. But if you buy and hold a crypto for more than one year before cashing it in, it is taxed as a capital gain (or loss). 10 So, if you mine a Bitcoin, you pay income taxes on it that year.
Did the New York Legislature approves bill to limit cryptocurrency mining? ›
2021-S6486 - Summary
Establishes a moratorium on cryptocurrency mining operations that use proof-of-work authentication methods to validate blockchain transactions; provides that such operations shall be subject to a full generic environmental impact statement review.
Is it illegal to mine cryptocurrency in the US? ›
Crypto mining is legal in the USA in all states except New York. However, it may be subject to change. Many authorities are voicing their opposition to crypto mining due to its extensive energy use and environmental pollution.
